TrueNorth Quantum Inc. - Annual Report: 2019 (Form 10-K)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For The fiscal year ended December 31, 2019

or

For the transition period from ___________ to ___________

Commission File Number 333-208978

United Royale Holdings Corp.

(Exact name of registrant issuer as specified in its charter)

Room 405, 4/F, Energy Plaza,

92 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong

(Address of principal executive offices, including zip code)

Registrant’s phone number, including area code (852) 2733 6100

Securities registered under Section 12(b) of the Exchange Act

None

Securities registered under Section 12(g) of the Exchange Act

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [  ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

At June 30, 2019, there were 94,583,967 shares of the registrant’s Common Stock issued and outstanding held by affiliate and the aggregate market value of voting and non-voting common equity held by non-affiliate were $246,513,384 and $246,513,384 respectively.

As of March 30, 2020, there were 141,990,387 shares of the registrant’s Common Stock issued and outstanding.

United Royale Holdings Corp

FORM 10-K

For the Fiscal Year Ended December 31, 2019

Index

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements. These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:

This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Defined Terms

Except as otherwise indicated by the context, references in this Report to:

PART I

ITEM 1. BUSINESS

Overview

We were incorporated on June 23, 2015 under the name of Bosy Holdings Corp. in the state of Nevada. On February 15, 2017, we changed our name from Bosy Holdings Corp. to United Royale Holdings Corp. to facilitate our re-branding efforts and develop and enhance our business.

Our principal executive office is located at RM 405, 4/F, Energy Plaza, 92 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong. Our principal telephone number is + (852) 2733-6100.

We offer planting and cultivation services to land owners in regards to the planting and cultivation of Aquilaria Subintegra & Aquilaria Sinensis trees. We also intend to provide services relating to the extraction of Agarwood from such trees through a process known as “inoculation.”

We believe we will be able to generate revenue from providing such services by charging a fee. We will determine an appropriate fee to charge, depending on the particular service or services that we will provide. At this time, we generate revenue through sale of Aquilaria saplings.

We are currently renting a plot of land so that we too can plant and cultivate such trees, and subsequently extract the Agarwood from them, of which we can then resell to consumers and distributors in four to six years’ time.

Description of Business

We currently have four employees including our Chief Executive Officer (CEO) and Director. Our CEO, Mr. Teoh has substantial experience with, and knowledge of, Agarwood plantation management and inoculation skills, and is responsible for training any new employees and overseeing anticipated expansion plans of hiring new employees in the future. Our Officers and Directors spend on our business up to an aggregate of 40 hours per week, but are prepared to devote more time if necessary.

Below are a few photographs from our orchard depicting the ongoing maintenance required to upkeep the Acquilaria trees. Additionally, we have provided a graphic depicting how the infection of the tree takes place (which is necessary to develop the Agarwood that we plan to ultimately harvest). The pink bottle is filled with an infectious fungus.

Description of Inoculation

Fungal inoculation is an important step in the process of harvesting agarwood and we briefly describe how fungal inoculation works, as it pertains to agarwood, below. First, about 1-10 cm deep holes are drilled up to the xylem of agarwood trees in specified spots and their trunks are injured. Holes are dug in such a manner that there is enough space for air circulation. Though the size of the holes is immaterial, care should be taken to see that the injury spreads and the holes don’t get covered.

Pipes made out of Plastic or Natural material can be inserted into these holes to ensure that they remain open. On an average, about 40 – 90 holes are drilled on one tree trunk, at a distance of 5 cm from one another. Once the spread of injury is ascertained, fungi should be released into the tree trunk, forcing the tree to start resin production. Either the fungi collected from old agarwood trees are collected and released into experimental plants or processed difco yeast, sodium bisulfite, ferric chloride, etc., are introduced in place of natural fungi.

Depending on their breed, agarwood can be obtained from 3 – 80-year-old-trees by the process of fungal inoculation. However, trees can start yielding agarwood 18 – 21 months after the infection has begun. It should additionally be noted that there are many other factors which play a major role in determining the yield of the plant.

Business Plan

We offer planting and cultivation services to land owners in regards to the planting and cultivation of Aquilaria Subintegra & Aquilaria Sinensis trees. We also provide services relating to the extraction of Agarwood from such trees, through the process of “fungal inoculation.”

We have targeted land owners seeking our services in Malaysia.

Note: “Plantation management services,” and “management services” are synonymous herein, with “planting and cultivation services.” “Landlord” is synonymous herein with “land owner.”

With the process of fungal inoculation explained previously this is how our business operations will be conducted going forward: We will provide any and all planting, cultivating, and or inoculation services requested by a landlord who already has an existing plot of land to grow Aquilaria Subintegra & Aquilaria Sinensis trees.

After consulting with the landlord in regards to the services they request from us, a fee will be agreed upon amongst us and the landlord. After coming to an agreement with the landlord on a fee for our services we will, within one week, provide the landlord a list of all the materials necessary to carry out the requested services. The landlord, not us will bear the costs of any materials and will maintain ownership of such materials after our services are no longer necessary. On a case by case basis we will determine whether the landlord will pay us to acquire such materials or if they will acquire the materials and then provide them to us. This will be at the landlord’s discretion. Any materials for any project will be held at the property of the landlord and we will not be responsible for their safekeeping. Our own employees however, will have some of their own general supplies and equipment provided to them by us, including but not limited to, gloves, hoes, shovels, tiller rake, and spades.

A few examples of some of the kinds of materials we may need depending on the scope of our services from landlords include: Saplings, fertilizer, soil, manure, sand, irrigation rigs, poly bags, fencing, and commercial farming machinery.

While many of the landowners may request our services to begin the process of planting new Aquilaria trees we believe many others will already have an existing orchard that is ready or close to ready for harvesting of Agarwood, at which time we can offer our inoculation services or services relating to the general maintenance of the trees. It should be noted that the scope of our services will be conducted on a case by case basis depending on the landlord’s request. We will however, be prepared to oversee any part of the process of caring for or cultivating the Acquilaria tree, regardless of what point in time it is currently in with respect to its lifespan. We will also be prepared to complete the inoculation process as well in which we would extract the Agarwood from the trees themselves.

In addition to our services that we intend to provide landlords, we also seek out a plot of land that we could either rent, or purchase to grow our own orchard of Acquilaria trees, of which we could then harvest the Agarwood from and sell to consumers or distributors. We will finance this project through those revenues. At this time, we have rented one property, which was Lot 4316, Batu 20, Jalan Segamat, 84900 Tangkak, Johor Malaysia. We have grown 5,765 Acquilaria trees with numbers and our company logo on this land.

Marketing Efforts

Currently, we have developed a corporate website, http://www.unitedroyale.com, which we feel will bolster our presence in the market space. On the site we list some of the services we intend to offer, investor relations and pictures of our employees at work.

We will also be pursuing marketing campaigns by utilizing the internet, social media, and perhaps even print media.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. DESCRIPTION OF PROPERTY

We do not own any real estate or other properties. The Company’s executive office is located at Room 405, 4/F, Energy Plaza, 92 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong. The office space is provided rent free by the Company’s Chief Executive Officer, Mr. Teoh Kooi Sooi.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are currently no pending legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is currently quoted on the OTCQB under the trading symbol “URYL.” Our common stock did not trade prior to September 6, 2017.

Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.

For the periods indicated, the following table sets forth the high and low bid prices per share of common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

We have issued 141,990,387 shares of our common stock since our inception on June 23, 2015. There are no outstanding options or warrants or securities that are convertible into shares of common stock.

Holders

As of March 30, 2020, we have 588 shareholders of record of our common stock.

Transfer Agent and Registrar

The transfer agent for our capital stock is Island Stock Transfer, with an address at 15500 Roosevelt Boulevard, Suite 301, Clearwater, FL 33760 and telephone number is +1 727-289-0010.

Penny Stock Regulations

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our Common Stock, when and if a trading market develops, may fall within the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse).

For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the investors’ ability to buy and sell our stock.

Dividends

No cash dividends were paid on our shares of common stock during the fiscal year ended December 31, 2019, 2018, 2017 and 2016. We have not paid any cash dividends since June 23, 2015 (inception) and do not foresee declaring any cash dividends on our common stock in the foreseeable future.

Recent Sales of Unregistered Securities

On November 25, 2019, the Company completed the issuance and sale of the Shares at a purchase price of $5.58 per share in a private placement to Mr. Teoh Kooi Sooi, our CEO. The Company received gross proceeds in the aggregate amount of $138,758 from Mr. Teoh, which consisted of a cash payment of $64,516 and a loan conversion of $74,242 into the Company’s paid-up capital. The proceeds will be used for working capital purposes and 24,867 shares of our common stock were issued to Mr. Teoh.

Purchases of Equity Securities by the Registrant and Affiliated Purchasers

We have not repurchased any shares of our common stock during the fiscal year ended December 31, 2019.

Other Stockholder Matters

None.

ITEM 6. SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements and the notes to those financial statements appearing elsewhere in this Report.

Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

GENERAL

United Royale Holdings Corp., formerly known as Bosy Holdings Corp. (the “Company”), was incorporated under the laws of the State of Nevada on June 23, 2015. The Company, is a developmental stage company that intends to offer planting and cultivation services to land owners in regards to the planting and cultivation of Aquilaria Subintegra & Aquilaria Sinensis trees. The company also intend to provide services relating to the extraction of Agarwood (Agarwood is extracted from those tree, about 10-15% wood of the tree can become Agarwood) from such trees, through the process of “fungal inoculation.”

We initially targeted our service to land owners in Malaysia.

As of June 14, 2017, Mr. Ong Kean Wah and Ms. Chen Yan Hong resigned from the position of Chief Operations Officer and director of the Company, respectively. Nevertheless, their departure didn’t affect our daily operation.

On December 29, 2017, the Company applied for uplifting to OTCQB Marketplace. On January 11, 2018, the Company obtained the official approval from the OTC Markets and is verified for trading OTCQB Marketplace on January 12, 2018.

On February 1, 2018, the majority of the directors and shareholders of the Company adopted the resolution to request a name change of the Company from “Bosy Holdings Corp.” to “United Royale Holdings Corp.”. The name change became effective with the State of Nevada on February 5, 2018. FINRA announced on February 14, 2018 that the new name of “United Royale Holdings Corp.” was be effective on February 15, 2018, and the new ticker symbol of “URYL” will be effective on February 15, 2018.

On March 30, 2018, Mr. Teoh Kooi Sooi resigned from the positions with the Company, including President of the Company. And Mr. Teoh will retain his position of Chief Executive Officer and director in the board. The resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Teoh Kooi Sooi has been the President of the Company since September 18, 2015.

On March 30, 2018, Mr. Chen Zheru resigned from the positions with the Company, including Secretary of the Company. And Mr. Chen will retain his position of director in the board. The resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Chen Zheru has been the Secretary of the Company since September 18, 2015.

As of March 30, 2018, Ms. Jaya C Rajamanickam was appointed as the Company’s new President. Ms. Feliana Binti Johny was appointed as the Company’s new Secretary.

On September 30, 2018, United Royale Holdings Corp. and Mr. Chen Zheru, representing the sole shareholder of IV Enterprises Development Limited, a Seychelles corporation (“IVED”), entered into a Sale and Purchase Agreement (the “Agreement”), pursuant to which URYL acquired 100% (one hundred percent) of the shareholding of IVED. In consideration for the transfer by Seller to URYL of the Share and the Purchased Assets, URYL shall assume the Assumed Liabilities and pay to Seller US$1 in cash at Closing.

IVED provides services through its wholly-owned subsidiary in Malaysia as set forth below:

On September 30, 2018, URYL completed the acquisition.

As of October 22, 2018, Mr. David Edwin Evans was appointed as the Company’s Chief Operating Officer.

As of October 22, 2018, Mr. Liao Lin was appointed as the Company’s Chief Sales Officer.

On November 30, 2018, Mr. Chen Zheru resigned from the board of directors with the Company. The resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Chen Zheru has been the director of the Company since September 18, 2015. On the same day, Mr. Li Gongming was appointed as the Company’s new member of board of directors.

On December 5, 2018, as a result of a private transaction, 100% shareholding of Bosy Holdings Limited has been transferred from Mr. Chen Zheru to Mr. Li Gongming. The consideration paid for the transaction was $50,000. The source of the cash consideration for the transaction was personal funds of the Purchaser. Bosy Holdings Limited, a limited liability company incorporated in Seychelles, holds 78,415,100 shares of United Royale Holdings Corp. The Transaction resulted in the Purchaser acquiring a total of 55.235% of the issued and outstanding share capital of the Company on a fully-diluted basis, which caused a change in control of the Company. And Mr. Li owns 6,000,000 shares of the Company as of December 7, 2018, which constitutes a total shareholding of 59.461% of the Company.

On April 1, 2019, the Company entered into a six-year tenancy agreement with Halaman Girang Sdn Bhd, the landlord of the farmland, for renting Lot 4316, Batu 20, Jalan Segamat, 84900, Tangkak, Johor, Malaysia. The monthly rental payment is MYR1,500, equivalent to around $363. The tenancy period is valid from April 1, 2019 to March 31, 2025.

On April 1, 2019, the Company entered into an agarwood management agreement with Ms. Simone Yap Xin Wei for providing agarwood plantation management and farming operations in the farmland. The agreement is valid from April 1, 2019 to March 31, 2020, with monthly service fee of MYR2,640, equivalent to $639.

On June 12, 2019, Mr. Soh Khay Wee was appointed as the Company’s Director. The biographies for new officers of the Company was filed in the Form 8-K filed with SEC on June 12, 2019.

Due to the Coronavirus outbreak since December, 2019, Malaysia government declared a Movement Control Order from March 18, 2020 to April 14, 2020. The temporary close down does not have much impact on our current operation, because currently we are in the plantation progress of Aquilaria Subintegra trees and we expect the harvest will take place within future 4 years’ time. At this moment, the trees are located at Johor, Malaysia, with sufficient rainfall and sunlight for growing. Once the Movement Control Order is expired or not extended, we will collaborate with our service provider to performance the maintenance work of the farmland.

Results of Operations

For the year ended December 31, 2019 and December 31, 2018

Revenue

We have not earned any revenues for the years ended December 31, 2019 and 2018.

General and administrative expenses

We incurred a total of $262,161 general and administrative expenses for the year ended December 31, 2019, while we incurred a total of $198,914 general and administrative expenses for the year ended December 31, 2018. The general and administrative expenses are mainly comprised of impairment loss, audit fee, professional fee, salary, transfer agent fee and Edgar Filing fee.

Net Loss

The net loss for the year ended December 31, 2019 and December 31, 2018 were $261,735 and $198,477 respectively, based on the increase in general and administrative expenses.

Liquidity and Capital Resources and Cash Requirements

As of December 31, 2019, the Company had cash of $63,839 as compared to cash of $261,930 as of December 31, 2018. The Company had a working capital of $49,793 as of December 31, 2019 when compared to working capital of $181,716 as of December 31, 2018.

Cash Used In Operating Activities

During the year ended December 31, 2019, the cash flows used in operating activities was $272,227. Our net loss for the period, increase in prepayments and decrease in accrual liabilities were the reasons for our negative operating cash flow.

During the year ended December 31, 2018, the cash flows used in operating activities was $181,560. Our net loss for the period and increase in prepayments and increase in accrual liabilities were the reasons for our negative operating cash flow.

Cash Used In Investing Activities

During the year ended December 31, 2019, the cash flows used in investing activities was $10,396, as the Company invested certain cash into maintenance of the farmland during the year of 2019.

During the year ended December 31, 2018, the cash flows used in investing activities was $14,042, as the Company invested certain cash into maintenance of the farmland during the year of 2018.

Cash Provided by Financing Activities

During the year ended December 31, 2019, the net cash provided by financing activities was $84,489, the major inflow were the issuance of shares in exchange of cash and director’s loan.

During the year ended December 31, 2018, the net cash provided by financing activities was $7,743, the major outflow was the acquisition of subsidiaries.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are an emerging growth company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements required by this item are located following the signature page of this Annual Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer concluded as of December 31, 2019, that our disclosure controls and procedures were not effective. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) ineffective controls over period end financial disclosure and reporting processes; and (4) lack of internal audit function due to the fact that the Company lacks qualified resources to perform the internal audit functions properly and that the scope and effectiveness of the internal audit function are yet to be developed. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of December 31, 2019.

Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The internal controls for the Company are provided by executive management’s review and approval of all transactions. Our internal control over financial reporting also includes those policies and procedures that:

1. pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management; and

3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls.

Based on this assessment, management has concluded that as of December 31, 2019 and December 31, 2018, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

We will increase our personnel resources and technical accounting expertise within the accounting function. We will create a position to segregate duties consistent with control objectives. And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

In fiscal year 2019, we tried to seek for an independent director who would undertake the oversight in the establishment and monitoring of required internal control and procedures, however, due to costing issue and geographical restriction, several candidates turned us down.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no change in our internal control over financial reporting for the year ended December 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

NONE.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Set forth below are the present directors and executive officers of the Company. Note that there are no other persons who have been nominated or chosen to become directors nor are there any other persons who have been chosen to become executive officers. There are no arrangements or understandings between any of the directors, officers and other persons pursuant to which such person was selected as a director or an officer. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and have qualified. Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

Teoh Kooi Sooi- Chief Executive officer, President, Treasurer, Director

Mr. Teoh Kooi Sooi, age 35, graduated from University Utara Malaysia with a bachelor’s degree in multimedia major. In 2008, he started his career as a marketing & sales manager. His main job responsibilities included business development as well as building and maintaining customer relationships. Subsequently, Mr. Teoh was appointed as a director of Multi Agro Tech Sdn Bhd Company in Jun 2010 and ceased to hold any position in January 2017.

Mr. Teoh’s experience with business development and director experience has led to his appointment as Chief Executive Officer, Treasurer and Director.

Jaya C Rajamanickam - President

Ms. Jaya C Rajamanickam, age 52, graduated from the University of Technology Malaysia (UTM) with a Bachelor Degree in Human Resource Development in 2008 and further obtain a Master Degree in Agricultural Engineer in 2011. Upon the graduation, Ms. Rajamanickam started working as a researcher in Global Resources Sdn Bhd from 2011 to 2013. Ms. Rajamanickam performed primary and secondary research on optimal benefits package for agarwood medium – big size plantation. From 2013 to 2015, Ms. Rajamanickam worked as a technology researcher in Agriculture in Agriculture & Environmental Techonologies Sdn Bhd. Besides conducting the market search for Malaysia agriculture sector, Ms. Rajamanickam was also responsible for the marketing strategy and presentation to clients and government body. From 2015-2017, Ms. Rajamanickam worked at Agarwood Management Services Sdn Bhd as a project manager and research analyst to oversee agarwood plantation sites and handle daily operational activities.

Ms. Rajamanickam’s experience in the agricultural industry has led the Board of Director to reach the conclusion that she should serve as President of the Company.

Feliana Binti Johny - Secretary

Ms. Feliana Binti Johny, age 24, graduated from the Universiti Tunku Abdul Rahman (UTAR) with a Bachelor Degree in Actuarial Science in 2017. Upon graduation in 2017, Ms. Johny started working as a credit analyst in Alliance Bank Malaysia Berhad. Ms. Johny analyzed the financial and credit information of the clients in order to determine risks prior to granting loans to SME companies from various industries. Ms. Johny conducted reviews on existing clients and identified weak credits for proactive remedial actions. Occasionally, Ms. Johny also conducted trade references and site visits to the clients in order to have a better understand on the business activities and operations.

Ms. Johny’s experience in the credit and risk assessment has led the Board of Director to reach the conclusion that he should serve as Secretary of the Company.

David Edwin Evans – Chief Operating Officer

Mr. David Edwin Evans, age 56, graduated from Tampa College, currently known as Everest University, with a bachelor’s degree in business management and master’s degree in Business Administration in 1987 and 1989 respectively, and in 2014, he further obtained a Doctor Degree in Management from Build Bright University in Cambodia. From January 2010 to September 2018, Mr. Evans worked as a vice president in Tech Actions Services, Kuala Lumpur, Malaysia. He was responsible for the product development in business consulting services, branding, and marketing. Furthermore, he managed customer relationships and performed as a one of the major communication channels between foreign distributors and local sales and marketing teams. Within this period, he developed his network in different business areas and obtained his doctoral degree in Build Bright University. Starting from October 2018, Mr. Evans joined United Royale Holdings Corp as a Chief Operating Officer, and handled the plantation and production of agarwood, communication with distribution channels and research and development part for improving output of agarwood.

Mr. Evan’s experience in the sales and distribution, together with his personal network, has led the Board of Director to reach the conclusion that he should serve as Chief Operating Officer of the Company.

Liao Lin – Chief Sales Officer

Mr. Liao Lin, age 44, graduated from Fujian Academy of Science with a professional certificate in computer science and engineering in January 2004 and Xiemen University with a bachelor’s degree in Accounting in December 2004. Mr. Liao worked as a financial investment consultant in Hong Kong Hantec Group from February 2008 to March 2016, who evaluated and made key investment decision across the Asia region and western countries by analyzing the economy outlook of specific region, industry and corporate forecasts. Furthermore, he engaged with corporate clientele executives in broader organizational strategic planning and implemented the strategic plans with the clients. From July 2016 to March 2017, Mr. Liao served as a secretary to the board of directors in Fujian Mielefu Culture Communication Co. Ltd. He was responsible for developing business cases and strategic options based on industry insights, internal capabilities, financial models, and internal-rate-of-return analysis to support planning initiatives to present to the board of directors. He also oversaw all audit and internal control operations in his capacity at Fujian Mielefu Culture Communication Co. Ltd and reported his findings to the board of directors with possible solutions to the internal control deficiencies. From April 2017 to September 2018, Mr. Liao worked as an independent consultant for different companies. Since October 2018, he has been the Chief Sales Officer of the Company.

Mr. Liao’s experience in the consulting and financial analysis, has led the Board of Director to reach a conclusion that he should serve as a Chief Sales Officer of the Company.

Li Gongming – Director

Mr. Li Gongming, age 41, graduated from the Jiangxi University of Finance and Econmics with a Bachelor Degree in International Accounting in 1999 and further obtained a professional certificate in Accounting and Auditing from Shanghai University of Finance and Economics in 2003. Upon graduation, Mr. Li started working as a stock analyst in Southwest Securities International Securities Limited from March 2003 to December 2003. Mr. Li worked in Wenzhou Dingsheng Asset Management Company Limited as a general management to oversee the whole operation of the asset management team, perform sorting of investment targets, attract investors and report performance to the top management, from February 2004 to August 2008. And from September 2008 to December 2016, he worked as a general manager of Wenzhou Wangsheng Asset Management Company Limited performing similar duties as his previous job. Since 2017, he has worked as an independent consultant of United Royale Holdings Corp, and he was appointed as a director on November 30, 2018.

Mr. Li’s experience in the financial industry and understanding of the Company has led the Board of Director to reach the conclusion that he should serve as director of the Company.

Soh Khay Wee – Director

Mr. Soh Khay Wee, age 49, graduated from the Swansea Institute of Higher Education, Wales, U.K., with a Postgraduate Diploma in marketing management in 1995 and further obtained a Master in Business Administration from University of Hull U.K. in 1996. Mr. Soh has started being a director of Omega Project Management Sdn. Bhd., which is involved in agricultural manpower and staffing field in Malaysia. His major responsibilities include to make company decision to align with company goals and objectives, organize and manage sales team on farm equipment, crops and agricultural products. Furthermore, he communicates with Southeast Asian agricultural industry leaders on farmland creation and projects management, and ensures the projects comply with different regulations in different jurisdictions on health and safety standards. On June 12, 2019, he has been appointed as a director.

Mr. Soh’s experience in the human resources industry and business administration has led the Board of Director to reach the conclusion that he should serve as director of the Company.

Family Relationships

There are no family relationships between any of our directors or executive officers.

Involvement in Certain Legal Proceedings

Our Directors and our Executive officers have not been involved in any of the following events during the past ten years:

1. Bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2. Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his/her involvement in any type of business, securities or banking activities; or

4. Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

5. Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

6. Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

7. Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:(i) Any Federal or State securities or commodities law or regulation; or(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

8. Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

TERM OF OFFICE

Our directors are appointed to hold office until the next annual meeting of our stockholders or until their respective successor is elected and qualified, or until she resigns or is removed in accordance with the provisions of the Nevada Revised Statues. Our Board of Directors hold office until removed by the Board or until their resignation appoints our officer.

DIRECTOR INDEPENDENCE

Our board of directors is currently composed of three members, neither of whom qualifies as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

COMMITTEES OF THE BOARD OF DIRECTORS

Our Board of Directors have no committees. We do not have a standing nominating, compensation or audit committee.

ITEM 11. EXECUTIVE COMPENSATION

MANAGEMENT COMPENSATION

The following tables set forth certain information about compensation paid, earned or accrued for services by our Executive Officer from January 1, 2018 to December 31, 2019:

Summary Compensation Table

* Resigned as of November 30, 2018

** Appointed as of June 12, 2019

There are current employment agreements between the company and Mr. Teoh Kooi Sooi, our CEO and Mr. Li Gongming, our director.

There are no annuity, pension or retirement benefits proposed to be paid to the officer or director or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the company or any of its subsidiaries, if any.

Director Compensation

The following table sets forth director compensation as of December 31, 2019:

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of December 31, 2019 certain information with regard to the record and beneficial ownership of the Company’s common stock by (i) each person known to the Company to be the record or beneficial owner of more than 5% of the Company’s common stock, (ii) each director of the Company, (iii) each of the named executive officers, and (iv) all executive officers and directors of the Company as a group:

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE

During the year ended December 31, 2019, the Company issued 24,867 shares of our common stock to Mr. Teoh Kooi Sooi, our CEO, in exchange of a working capital of $138,757 going into the Company.

During the year ended December 31, 2019, the Company paid $60,000 and $60,000 to Mr. Teoh Kooi Sooi and Mr. Gongming, our CEO and Director, as their remunerations of the capacities they held in the Company respectively.

As of December 31, 2019, our Chief Executive Officer, Mr. Teoh had loaned $6,686 to the Company to provide working capital for its business operations. The loan is unsecured, non-interest bearing and due on demand.

As of December 31, 2019, our Director, Mr. Li Gongming had loaned $4,598 to the Company to provide working capital for its business operations. The loan in unsecured, non-interesting bearing and due on demand.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

The following table sets forth the aggregate fees billed to the Company by its independent registered public accounting firms for the fiscal years ended December 31, 2019 and 2018. On January 2, 2018, we have engaged TAAD LLP (“TAAD”) as its principal accountant and dismissed Weld Asia Associates (“Weld Asia”) from that role. The accounting fees and services charged by TAAD for 2019 and 2018 are shown separately in the following table.

TAAD LLP

The category of “Audit fees” includes fees for our annual audit, quarterly reviews and services rendered in connection with regulatory filings with the SEC, such as the issuance of comfort letters and consents. During the year ended December 31, 2019 and 2018, the financial statements of the Company were audited by Weld Asia Associates and TAAD LLP.

The category of “Audit-related fees” includes employee benefit plan audits, internal control reviews and accounting consultation.

The category of “Tax services” includes tax compliance, tax advice, tax planning.

The category of “All other fees” generally includes advisory services related to accounting rules and regulations.

All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.

PART IV

ITEM 15. EXHIBITS

The following exhibits are included as part of this report by reference:

*Filed herewith

** Previously filed as an exhibit to the Company’s Form 8-k filed with SEC on February 15, 2018

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, and in the capacities and on the dates indicated:

UNITED ROYALE HOLDINGS CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

United Royale Holdings Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of United Royale Holdings Corp. (the “Company”) as of December 31, 2019 and 2018, the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

Going Concern Matter

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ TAAD LLP

We have served as the Company’s auditor since 2018

Diamond Bar, California

March 30, 2020

UNITED ROYALE HOLDINGS CORP.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of share)

The accompanying notes are an integral part of these audited consolidated financial statements.

UNITED ROYALE HOLDINGS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

See accompanying notes to the audited consolidated financial statements.

UNITED ROYALE HOLDINGS CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

The accompanying notes are an integral part of these audited consolidated financial statements.

UNITED ROYALE HOLDINGS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

The accompanying notes are an integral part of these audited consolidated financial statements.

UNITED ROYALE HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

United Royale Holdings Corp., formerly known as Bosy Holdings Corp. (“the Company”, “we”, “us” or “our”) was incorporated in the State of Nevada on June 23, 2015. We intend to offer planting and cultivation services to land owners in regards to the planting and cultivation of Aquilaria Subintegra & Aquilaria Sinensis trees. We also intend to provide services relating to the extraction of Agarwood from such trees through a process known as “inoculation.”

On September 30, 2018, the Company and Mr. Chen Zheru, representing the sole shareholder of IV Enterprises Development Limited, a Seychelles corporation (“IVED”), entered into a Sale and Purchase Agreement, pursuant to which the Company acquired 100% (one hundred percent) of the shareholding of IVED. IVED provides tree nurseries, including planting, cultivation and inoculation services through its wholly-owned subsidiary, Oudh Tech Sdn Bhd, in Malaysia. The acquisition is completed on September 30, 2018.

Mr. Chen Zheru is the common director and major shareholder of the Company and IVED. As a result of this common ownership and in accordance with the FASB Accounting Standards Codification Section 805 “Business Combination”, the transaction is being treated as a combination between entities under common control. The recognized assets and liabilities were transferred at their carrying amounts at the date of the transaction. The equity accounts of the combining entities are combined. Further, the companies will be combined retrospectively for prior year comparative information as if the transaction had occurred on January 1, 2017.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the year ended December 31, 2019, the Company incurred a net loss of $261,735 and used cash in operating activities of $272,227. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial support from its shareholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.

Basis of presentation

The accompanying financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

The accompanying financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions and balances were eliminated in consolidation.

Below is the organization chart of the Group.

UNITED ROYALE HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

Use of estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheet, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.

Cash, cash equivalents, and restricted cash

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. Restricted cash represents cash restricted by Hang Seng Bank as the bank account was forced to close on October 5, 2018, and this amount of cash was held by Hang Seng Bank. The reason for forced closure was a long period dormant without account activity.

Our deposit in Hong Kong is currently deposit in HSBC Hong Kong, and there is a Deposit Protection Scheme protects our eligible deposits held with bank in Hong Kong which is members of the Scheme. The scheme will pay us a compensation up to a limit of HKD500,000, which is equivalent to $64,102, if HSBC Hong Kong fails.

Our deposit in Malaysia is currently deposit in Malayan Banking Berhad, and there is a Perbadanan Insurans Deposit Malaysia protects our eligible deposits held with bank in Malaysia which is members of the Scheme. The scheme will pay a compensation up to a limit of Malaysia Ringgit (“MYR”) 250,000 per deposit per member bank, which is equivalent to $61,234, if the aforementioned banks fails.

Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and impairment. Depreciation of plant, equipment and software are calculated on the straight-line method over their estimated useful lives or lease terms generally as follows:

The Company purchased 2 computers at the end of June 2017, and the computers has been subject to depreciation since the utilization in July 2017. Expenditures for maintenance and repairs will be expensed as incurred.

Biological Assets

Biological Assets of the Company comprise of agarwood sapling and plantation cost of agarwood.

Pursuant to ASC 905-360-25-2, biological Assets are planted and brought to production by the Company or on a contract basis. Saplings are usually purchased as nursery stock and transplanted into the farmland in the desired pattern. Cost of biological assets consists of accumulated planation development costs incurred from commencement of planting of seedlings up to maturity of the crop cultivated. Capitalization of planation development and other operating costs ceases upon commencement of commercial harvesting, which range from 7 to 9 years. Net proceeds from sales of products before commercial production begins shall be applied to the capitalized cost of the plants, trees, or vines.

Biological Assets is measured using average cost, and is measured at the lower of cost and net realizable value. When evidence exists that the net realizable value of biological Assets is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs. Impairment loss may be required, for example, due to damage, physical deterioration, obsolescence, changes in price levels, or other causes.

Pursuant to ASC 905-360-35-4, when production in commercial quantities begins, the accumulated costs shall be depreciated over the estimated useful life of the particular farmland.

UNITED ROYALE HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.

The reporting currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. Hong Kong Dollars (“HK$”), which is the respective functional currencies for the Company as the deposit is currently kept in HSBC Hong Kong. In addition, the Company’s subsidiaries maintain their books and records in their respective local currency, which consists of the Hong Kong Dollars (“HK$”) and Malaysian Ringgit (“MYR”), which is also the respective functional currency of the subsidiaries.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$ using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of a foreign subsidiary are recorded as a separate component of accumulated other comprehensive loss within equity.

Translation of amounts from the local currencies of the Company into US$ has been made at the following exchange rates for the respective periods:

Revenue recognition

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, “Revenue From Contracts With Customers”, the Company recognizes revenue from sales of goods and services when the following five following steps are carried out: (1) Identify the contract; (2) Identify the performance obligations; (3) Determine the transaction price; (4) Allocate the transaction price; (5) Recognize revenue. For the years ended December 31, 2019 and 2018, the Company had no revenue recorded, as a result, there was no effect on revenue by adopting ASC 606 starting from January 1, 2018.

UNITED ROYALE HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

Income taxes

The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company’s assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its Consolidated Statements of Income.

Significant management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company in future periods.

Fair value of financial instruments

The carrying value of the Company’s financial instruments: cash and cash equivalents, prepayments, amount due to a director and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.

The Company follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

● Level 1 : Observable inputs such as quoted prices in active markets;

● Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

● Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions

Lease

Prior to January 1, 2019, the Company had not entered into formal lease agreement and the Company accounted for leases under ASC 840, Accounting for Leases. Effective July 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The implementation of ASC 842 did not have a material impact on the Company’s consolidated financial statements and did not have a significant impact on our liquidity or on our compliance with our financial covenants associated with our loans. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease right-of-use assets of $21,330, lease liabilities for operating leases of $21,330, and a zero cumulative-effect adjustment to accumulated deficit. See Note 10 for further information regarding the impact of the adoption of ASC 842 on the Company’s financial statements.

Recent accounting pronouncements

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted the new standard effective January 1, 2018, and the standard did not have a material impact on our financial statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. We adopted the new standard effective January 1, 2018 on a prospective basis. The new standard did not have a material impact on our consolidated financial statements.

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

UNITED ROYALE HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

The prepaid expenses as of December 31, 2019 included OTCQB annual fee of $12,000, and deposit of $2,013 and $6,410 in transfer agent and our consultancy firm respectively, while the prepaid expenses as of December 31, 2018 included OTCQB annual fee of $12,000, and deposit of $1,931 in transfer agent and farm maintenance service provider.

The Company acquired a computer as equipment and a software at $3,731 and $147 respectively in 2017, and the accumulated depreciation as of December 31, 2019 and December 31, 2018 were $3,232 and $1,939, which constituted a net book value of $646 and $1,939 respectively.

The Company acquired Engine Pump at MYR7,500 in 2017. The accumulated depreciations as of December 31, 2019 and December 31, 2018 were $456 and $288, which constituted a net book value of $1,360 and 1,529 respectively.

The depreciation expense for 2019 and 2018 were $1,474 and $1,472 respectively.

Biological Assets of the Company comprise of agarwood sapling and plantation cost of agarwood.

The Company acquired the agarwood sapling at MYR98,800 (approximately $24,395) in 2017. The accumulated planation development costs incurred from commencement of planting of seedlings after impairment loss as of December 31, 2019 and 2018 were $37,297 and $28,697 respectively. For the years ended December 31, 2019 and December 31, 2018, the cost captured into account were $10,967 and $13,083 respectively.

An impairment tests were carried on December 31, 2019 and 2018, we wrote off $2,367 and $18,109 of biological assets respectively. The reason for impairment loss was the natural immortality of the agarwood trees.

The income (loss) before income taxes of the Company for the years ended December 31, 2019 and 2018 were comprised of the following:

UNITED ROYALE HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

Provision for income taxes consisted of the following:

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. During the periods presented, the Company has a number of subsidiaries that operates in different countries and is subject to tax in the jurisdictions in which its subsidiaries operate, as follows:

United States of America

The Tax Act reduces the U.S. statutory corporate tax rate from 35% to 21% for our tax years beginning in 2018, which resulted in the re-measurement of the federal portion of our deferred tax assets as of December 31, 2017 from the 35% to 21% tax rate. The Company (URYL) is registered in the State of Nevada and is subject to United States of America tax law. As of December 31, 2019, the operations in the United States of America incurred $663,824 of cumulative net operating losses (NOL’s) which can be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2039, if unutilized. The Company has provided for a full valuation allowance of approximately $139,403 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

UNITED ROYALE HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

Hong Kong

Bosy Holdings (HK) Limited operating in Hong Kong are subject to the Hong Kong Profits Tax at the statutory income tax rate of 8.25% on assessable profits up to HK$2,000,000 (approximately $256,410); and 16.5% on any part of assessable profits over HK$2,000,000. For the years ended December 31, 2019 and 2018, subsidiary in Hong Kong incurred an aggregate operating loss of $4,464 and $940 respectively. The cumulative operating losses can be carried forward to offset future taxable income. The Company has provided for a full valuation allowance against the deferred tax assets of $446 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

Malaysia

Oudh Tech Sdn Bhd is subject to the Malaysia Corporate Tax Laws at a progressive income tax rate starting from 17% on the assessable income for its tax year. For the years ended December 31, 2019 and 2018, Oudh Tech Sdn Bhd incurred an aggregate operating loss of $7,867 and $18,307, respectively, which can be carried forward indefinitely to offset its taxable income. As of December 31, 2019, the operations in Malaysia incurred $39,565 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss can be carried forward indefinitely. The Company has provided for a full valuation allowance against the deferred tax assets of $6,726 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2019 and December 31, 2018:

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $146,575 as of December 31, 2019. For the year ended December 31, 2019, the valuation allowance increased by $53,052, primarily relating to the increase in salary commitment.

UNITED ROYALE HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

As of December 31, 2019 and 2018, our director loaned to the Company $11,284 and $66,355, respectively. This loan is unsecured, non-interest bearing and due on demand.

During 2019, our director, Teoh Kooi Sooi converted $74,242 into shares in the private placement took place on November 25, 2019. During 2018, our director, Teoh Kooi Sooi waived $7,426 in Oudh Tech Sdn Bhd, a wholly owned subsidiary acquired on September 30, 2018, as contribution and recorded in additional paid in capital.

On November 25, 2019, the Company issued 24,867 shares of our common stock to Mr. Teoh Kooi Sooi, our CEO, in exchange of a working capital of $138,757, consisted of $64,516 in cash and $74,241 loan conversion, as contribution and recorded in share capital and additional paid capital.

On September 30, 2018, our CEO, Mr. Teoh Kooi Sooi, waived $7,426 in Oudh Tech Sdn Bhd, a wholly owned subsidiary acquired on September 30, 2018, as contribution and recorded in additional paid in capital.

As of December 31, 2019 and 2018, there are 141,990,387 and 141,965,520 shares of common stock issued and outstanding respectively.

There were no stock options, warrants or other potentially dilutive securities outstanding as of December 31, 2019.

On December 1, 2017, Our Chief Executive Officer, Mr. Teoh and our director, Mr. Chen entered into the employment contract with the Company. Mr. Teoh was paid at $5,000 per month and Mr. Chen was paid at $500 per month, both salary were paid in wire transfer. On the same day, the Company employed one more accountant at $800 per month. Mr. Chen was resigned on November 30, 2018.

In addition, on December 1, 2018, our director, Mr. Li Gongming entered into the employment contract with the Company. Mr. Li was paid at $5,000 per month in form of wire transfer.

The Company has operating lease agreements for a farmland with remaining lease terms of 6 years. The Company does not have any other leases. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

This standard did not have a significant impact on our liquidity.

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:

Maturity of the Company’s lease liabilities are as follows:

Lease expenses were $3,262 during the year ended December 31, 2019, respectively, and there was no rent incurred during the year ended December 31, 2018, respectively.

11. SUBSEQUENT EVENTS

Due to the Coronavirus outbreak since December, 2019, Malaysia government declared a Movement Control Order from March 18, 2020 to April 14, 2020. The temporary close down does not have much impact on our current operation, because currently we are in the plantation progress of Aquilaria Subintegra trees and we expect the harvest will take place within future 4 years’ time. At this moment, the trees are located at Johor, Malaysia, with sufficient rainfall and sunlight for growing. Once the Movement Control Order is expired or not extended, we will collaborate with our service provider to performance the maintenance work of the farmland.